Government wastes more money in its defence

If the eyes of the world weren’t on a certain stadium in Soweto, the chances are we’d all be devoting a lot more time to scrutinising yet another government U-turn – this time at the Ministry of Defence.

Just a day after Iain Duncan Smith was forced to account for millions of pounds of wasted taxpayers’ money at the work and pensions department, now £7.4m have been poured down the drain because plans to outsource defence procurement have been torn up.

It’s a slightly nerdy story, but bear with me a moment.

The MoD had wanted to replace the Defence Equipment and Support agency, which buys kit like tanks and warships, with a government-owned, contractor-operated body nicknamed GoCo.

But the bidding process disintegrated after all but one private sector company pulled out.

As a result Defence Secretary Philip Hammond now says he’s creating a new government-run entity to buy equipment and supplies “along commercial lines”.

One government member told me the “machine” – that is the civil service – had “killed” GoCo because it didn’t want to relinquish control to the commercial world. “It’s not ministers, it’s the civil service who smother momentum,” the source said.

And the cost to the public is potentially huge.

Mr Hammond was relying on GoCo to balance the department’s books and absorb a £38bn black hole.

Outsourcing procurement in this way would, the defence secretary hoped, save as much as £10bn in the medium term. Now, it’ll be that much harder to make ends meet.

Senior military types are already rebelling over the cuts to the army unveiled by Mr Hammond, particularly as it’s been trickier than expected to increase the number of reservists to make up the shortfall.

The MoD can’t take much more financial strain, so the future savings from procurement are pretty crucial.

The bigger political point is that yet another U-turn and yet another example of money wasted risks denting the government’s reputation for financial competence.

Dire warnings about Labour’s recklessness in government carry less weight if the Tories and Lib Dems can’t keep their own Whitehall houses in order.

Mr Hammond said in a statement to MPs that he hadn’t ruled out privatising the procurement of military equipment in future.

Before that happens he, like Mr Duncan Smith, will have to work out a way of getting the civil service to deliver the reforms they so badly want without wasting a whole heap more money.

Follow @cathynewman on Twitter.